bubbleinfo.com

It looks like servicers are coasting into the HAFA/short-sale era, which officially begins April 5th. Here are the foreclosure stats from the last 12 weeks:

My guess?  The HAFA package will encourage borrowers to pick a lane – either loan modification or short-sale.  But there are probably enough strategic defaulters to keep it busy down at the court house steps, but so far there have been very few quality properties at attractive opening bids.  I’m checking the list everyday, and I haven’t gone down to the ’steps once this year!

December 15, 2009 – ForeclosureRadar.com, the only website that tracks every California foreclosure and provides daily auction updates, issued its monthly California Foreclosure Report for November 2009. Despite apparent headline month-over-month declines in foreclosure activity, the real story requires looking at changes in the average daily activity. November had only 18 days on which filings could be recorded or trustee sales held because of fewer days in the month, Veterans Day and the Thanksgiving Holiday, while October had 22 recording days, and 21 trustee sale days.

After adjusting for this difference in days we find little month-over-month change in the statistics, with the exception of Notices of Trustee Sale which declined 13.4 percent, Cancellations, which rose 40.0 percent, and Sales to 3rd Parties, which rose 8.0 percent on a daily average basis.

“We’ve been waiting to see some impact from the Home Affordable Modification Program,” says Sean O’Toole, Founder and CEO of ForeclosureRadar.com. “The 40 percent increase in cancellations this month is likely just the beginning of what we expect will be a wave of cancellations under this program”.

Despite the significant drop in filings of new Notices of Trustee Sale, and an increase in the number of Cancellations, the number of foreclosures Scheduled for Sale still rose.  The simple reality is that homeowners are continuing to enter foreclosure faster than they are coming out.  This will likely continue until we see meaningful progress on loan modifications, or the often predicted “foreclosure wave” finally occurs.

Over the weekend I was discussing with a new client my outlook for 2010.

He said that in person I sounded more optimistic about the market than on the blog, and I agreed.  Some is due to trying to provide all evidence and let you decide, but more is due to recent activity.

Watch this youtube, and you’ll see reasons why I think the local real estate market is going to take off like a rocket in 2010:

Here is more from our trustee-sale investigation. 

When the trustee sale has no bidders, and the property goes ‘back to bene’, how does the bank perform in the open market?  This is a review of the sixty Bank of America and forty of the Wells Fargo REO sales since September 1st:

When was the house purchased by the former owner?

2002 or before:  24 

2003:  8 

2004:  20 

2005:  17 

2006:  20 

2007:  11 

There are a number of long-time homeowners who are now renting or staying with family (more than half owned for at least 5 years!).

*************************************************

Was it a purchase or refinance mortgage that was foreclosed?

Purchase:  42 

Refinance:  58

Whether they knew it or not, 42% of the buyers were speculators.  When things didn’t work out, they weren’t willing, or able, to endure.

************************************************

Of the 42 purchase loans that got foreclosed, when did they buy?

2004:  5

2005:  13

2006:  16

2007:  8 

Those who purchased in 2004 and 2005 could have refinanced by fogging a mirror in 2006, but didn’t.  Were they already underwater?

*************************************************

Opening Bid vs. Eventual REO Sales Price

Sold REO for at least $100K more than OB: 5

Sold REO for $50,000 to $100,000 more than OB:  18

Sold REO within $50,000 of OB:  62

Sold REO for $50,000 to $100,000 less than OB:  5

Sold REO for at least $100,000 under OB:  10

Generally they are getting the opening bids pretty close to retail value.  But if you are really good at flipping, there is excess opportunity if 23% of the ‘back-to-bene’ properties are selling for at least $50,000 more than the price you could have paid on the court house steps.  Note that 15% sold for at least $50,000 under OB price too.

***********************************************

Only six of the 100 were in our stretch from Carlsbad to La Jolla, and only two of those were houses (both in Carlsbad).  There were a lot of condos and Chula Vista properties!

Take a ride around town on the “Euphoria Express”, and see how some recent REO listings have been selling:

When the big bombers start falling from above, it can’t help but squish everything below.  This Pulte tract house in La Costa Greens sold for around $1.3 million in 2005:

A few months back after this house was foreclosed for the second time, I went by and found a door open, and peeked inside for a quick look.  There has been workers there ever since, so hopefully we’ll see it back on the market at some point – and maybe get an after-look?

The N.A.R. has a thing called ‘Center for REALTOR Technology’ which apprarently has been on a 14-month journey to find the most inspiring agents who use technology:

http://blog.realtors.org/crt/2009/09/16/the-spotlight-is-plugged-in-finalists/

Fifth on the list of ‘Pioneers’ is the guy who took a swipe at me the other day, noting on his blog that I was complaining about getting REO listings.

Seeing him on the list reminded me to explain the process further.

***********************************************************************************

Remember this one?  It finally closed!

4773 Sequoia, Oceanside

Assigned to JtR: 9/12/08

Tasks:

Determine occupancy

Offer cash-for-keys, which the tenant first accepted, then declined.

Evict tenant.

Manage his ‘personal property’ (junk) left behind.

Put utilities in my name, and pay for them until after closing.

Obtain repair quotes, and make sure work is completed satisfactorily.

Complete two BPOs (broker price opinion).

List property for sale at $179,800, which was $20,000 under my latest BPO.

Field and manage 19 incoming offers and related calls and emails.

Issue 19 highest-and-best counteroffers.

Field and manage the returning counteroffers.

Help pick a winner, at $235,000.

Meet appraiser, and beg for mercy.

Explain in writing why appraisal came in at $218,000 (5 recent comps within $5,000 0f $218K)

Read and respond as needed to 257 messages on the system.

Follow-through to closing, which it did on 9/2/09, almost a year after assignment.

*********************************************************************

We have plenty of help to complete these tasks, so there’s no problem doing the work. 

When I was complaining the other day, it was only because I’d like to occasionally get assigned a local high-dollar REOs, in exchange for travelling around the county selling the cheaper mold farms and crack houses.

For example, remember the RSF house featured here a few days ago?  The listing agent represented the buyer and seller, which means he was paid 6% on $2,090,000.   I’d just like to see one of those come my way. 

In the meantime, I’ll quit complaining.  I don’t want high-powered, award-winning realtors to think I’m not grateful, because I am – I love listing REOs!

Realtor Training – This is the lead (and only) photo for a new Downey REO listing. 

How many problems/disclosure items can you find?

(This is for training purposes only, and I hope the powers that be will allow the photo to be used)

Part of the duties of the listing agent of REO properties is going to court as the bank’s representative in the eviction cases.  The first one was a couple of months ago regarding the mortgage-fraud case, and we worked out an amicable agreement with the tenant-witness in the court’s hallway.

My second REO unlawful-detainer case was Wednesday morning.

A disheveled old guy whose hair hadn’t seen a comb in weeks identifies himself as the defendant’s attorney.  The commissioner asks us to go out to the hallway to discuss the case, where Frumpy confirms that they are claiming that the bank committed fraud on his clients.

Countrywide’s eviction attorney is located in Costa Mesa, and they contract-hire local independent attorneys to handle the courtroom work.  Our guy tells the defendant’s attorney that Countrywide has already agreed to give his clients an additional 30 days to vacate the property.

He shows him the agreement in writing, which is on the letterhead of the Costa Mesa attorney.  Frumpy challenges the local attorney’s authority, and they agree to call the Costa Mesa firm.  But neither one of them has a phone, so the old guy takes my phone and starts walking to get better reception. 

About ten minutes goes by, and I start heading for the parking lot, wondering if this guy could walk off with my phone!

We find him stumbling back in, and they agree to conduct the trial.

The proceeding begins with the commissioner saying that the purpose of the UD court is to determine possession of the property.  If there are any other issues, they need to be handled in Superior Court.

The plaintiffs go first, so our attorney submits copies of trustee’s deed and eviction notice, plus asked me a few questions. 

Frumpy then waxes on about how the bank perpetrated a fraud upon the defendants by giving them a mortgage that requires 80% of their monthly income.  Then he question’s my authority to speak on behalf of Countrywide, asking if I brought my written agreement.

The commissioner then asked him if the defendants are present, and he says no.

She asks if they’ve filed a fraud case against Countrywide, and he says no.

The commissioner finds in favor of the plaintiffs, suggesting to Frumpy that if his clients have a fraud case, they ought to file it.

Nobody brought up the 30-day extension that we discussed in the hallway, so in 7-10 days the sheriff will be physically removing the former owners from the house.

Of the 25 REO properties since April, this is the first one where the former owners were belligerent towards us about the cash-for-keys offer, and then tried to contest the case in unlawful-detainer court.   In 2009 I think we’ll see even fewer people contest the foreclosures, or try to save themselves with a loan modification.  A company that specializes in midnight moves could make a killing though!